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Exam 3: B: Exploring Global Business

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Question 21

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One of the consequences of trade restrictions is misallocation of international resources.

A) True
B) False

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Question 22

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Least-favored-nation (LFN) status was the famous principle of GATT.

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B) False

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Question 23

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Critics of NAFTA maintain that is has resulted in job losses and has done nothing to help the environment.

Decreases in trade barriers create more choices for consumers and new opportunities for job seekers.

A letter of credit is issued by the transport carrier to the exporter to prove that merchandise has been shipped.

Due to worldwide trade restrictions, international business is declining in volume.

A restriction on the amount of a particular foreign product that can be purchased or sold is called a foreign-exchange control.

Absolute advantage is the ability to produce a specific product more efficiently than any other nation.

MERCOSUR is the third-largest trading block behind NAFTA and the EU.

Devaluation decreases the cost of foreign goods and increases the cost of domestic goods to foreign firms.

A limit on the amount of a particular good that may be imported into a country during a given period of time is called an import quota.

By definition, every country has a comparative advantage in some product.

Quotas may be set on worldwide imports or on imports from a specific country.

Exportation of large quantities of a product at a price lower than that of the same product in the home market is called dumping.

A reduction of the value of a nation's currency relative to the currencies of other countries is called a currency devaluation.

All five multilateral development banks are supported by the industrialized nations, including the United States.

Joint venture agreements generally require a very low level of commitment from all the parties involved.

Selling and shipping raw materials or products to other nations is known as exporting.

A draft is issued by the exporter's bank, ordering the importer's bank to pay for the merchandise and thus guaranteeing payment once it is accepted by the importer's bank.

Political considerations usually are involved in a country's decision to impose a trade embargo.